Although the U.S. natural gas industry has experienced unprecedented growth over the past decade, natural gas distribution remains limited in many areas of the country, particularly in rural areas where competition from alternative heating sources undercuts the economic case for pipeline expansion. A panel of experts from the South Carolina Energy Office, the Massachusetts Department of Regulatory Utilities, and Atmos Energy Corporation addressed State Energy Officials during the NASEO 2018 Energy Policy Outlook Conference to discuss the policy issues around valuing the expanded delivery of natural gas and explore considerations for engaging both utility commissions and communities.
Andreas Thanos of the Massachusetts Department of Public Utilities reported that while most states do have natural gas expansion policies in place, projects typically are not permitted if they are expected to increase costs to existing customers. This adds to an already growing dilemma for states across the nation. In South Carolina, for example, the in-state provider is largely at capacity despite several areas of the state having little to no access to the resource. Maeve Mason of the South Carolina Energy Office remarked that the state’s 2016 State Energy Plan identified several additional factors that were further elevating the importance of increased natural gas access, including proposed legislation, the abandoned VC Summer Nuclear project, and a proposed merger between Dominion Energy and the South Carolina Electric and Gas Company (SCE&G).
Citing a November 2017 report from the National Association of Regulatory Commissioners (NARUC) on Natural Gas Access and Expansion, Mr. Thanos identified several recommendations for public service commissions to promote expansion to underserved areas, including increased transparency and vigor for stakeholder input processes, new financing and payment options to incentivize pipeline extension and connection, and adjustments to Contribution in Aid of Construction (CIAC) payments to reflect market expectations. Likewise, William Senter of Atmos Energy Corporation provided examples of three key initiatives his organization was engaged in to support expansion into rural areas, including a supplemental growth rider to attract large industrial users, an infrastructure advancement initiative that authorized 5 million annually for rural build-outs, and the SmartChoice Energy Efficiency incentive. While several obstacles exist to expanding natural gas infrastructure into rural and underserved areas, several states have implemented policies specifically designed to address rural expansion. By engaging with public and private stakeholders, State Energy Directors have the unique opportunity to advance policy considerations and facilitate economic development opportunities around access to natural gas.